US Metro Areas Must Compete Globally, Not with Each Other
The mainstream macro-economists tell us that globalization is good for the world and good for the United States. Maybe, maybe not. But two things seem certain: Globalization is here to stay, and it produces big disruptions in places that have lost manufacturing jobs to China and other low-wage countries.
In the United States, those places are our older industrial metro areas, whose economic health is key to America's competitiveness. The largest 100 metro areas contain 65% of our population and produce three quarters of our gross domestic product. Some are thriving, but others have yet to find their footing in the global economy. Over 65 metro areas from Baltimore to Beaumont, New Orleans to Newark (see the full list here), are currently in a downward spiral of declining jobs, population, tax revenues and other vital signs.
How can mayors and county executives in these places cope?
In November, the American Assembly convened a meeting chaired by Governor Ed Rendell of Pennsylvania and Ken Lewis, Chairman and CEO of Bank of America, and leading experts from around the nation and the UK to discuss how older metro areas can compete.
They wrote up their recommendations in a report entitled Retooling for Growth. It ought to be required reading for every state and city official, as well as the presidential candidates and their issues and speechwriting staffs. It finds there is plenty we can do to reverse the decline of these areas and strengthen our economy if we:
* Think and act metro. The economic unit that needs the economic development strategy is the metropolitan area—not the central city. Although it is sometimes true that central cities are competing with their suburbs, the real competition is between metro areas and other metropolitan areas around the world. Older industrial areas that will compete well are those that see themselves as an economic unit and act that way.
* Build from assets. Older metro areas have significant assets to work from, including colleges, universities, and hospitals. In this new economy, these places are poised to capitalize on these anchor institutions to build a knowledge-based economy, which is where the cutting edge is.
* Focus on human capital. Making these economies thrive again requires smart, networked people. Working to attract, retain, and network highly skilled people—some of whom are able to start new enterprises -- is key. This means that quality of life issues—safe neighborhoods, good schools, cultural and sports amenities--are essential to building the human resources needed to compete.
* Grow entrepreneurs. Most job growth occurs by retaining and expanding existing businesses, not by luring new businesses to move in. These older industrial areas need to create an economy where entrepreneurship can thrive—in neighborhoods, and in the region—so that new jobs are grown, not imported.
* Develop a new governmental compact. The federal government and state governments need to invest in older industrial areas, but it is only right that they demand accountability and buy-in from the recipients. Leaders of these areas – whether government, business, civic, and/or community -- must take responsibility for achieving results (Good Jobs First has published a wealth of site-specific studies on how to generate more results from economic development subsidies).
Despite the challenges, older industrial areas can and will find their places in the global economy if they focus on these opportunities.